The American Action Forum (@AAF) today released an analysis of factors surrounding funding differences among financial institutions on the heels of a report by the Government Accountability Office (GAO) that looked at whether large banks receive an implied subsidy
This week the debate around the “Too Big to Fail” problem (TBTF) heated up again with the release of a new report by the Government Accountability Office (GAO). The GAO report, at the request of Senator Sherrod Brown and Senator David Vitter, delved into the question of whether and to what degree the largest banks in the U.S. receive an implied subsidy vis-à-vis other banks.
Spending growth is slowing, and recent data released from the Bureau of Economic Analysis hints that growth may remain low as the economy recovers—though these estimates are subject to revision. If the current trend of growth continues, it would certainly improve the nation’s fiscal health.
American Action Forum President Douglas Holtz-Eakin will testify this afternoon before the Senate Banking Committee regarding the Government Accountability Office (GAO) report on expectations of government support for bank holding companies. Following are key highlights from his testimony. You can read the full testimony here.
Chairman Brown, Ranking Member Toomey and Members of the Committee, I am grateful for the privilege of appearing today. In my brief testimony today I would like to make four main points:
•Any expectations of government support for bank holding companies is at root a problem created by policymakers’ discretionary actions;
• The history of federal government assistance is not a pattern of consistent intervention on behalf of large firms, but rather an erratic and unpredictable series of interventions on behalf of firms large, small, financial, and nonfinancial;
• Attempts to measure any “implicit too-big-to-fail (TBTF) subsidy” is an elusive quest due to the many confounding factors; and
• Any market TBTF expectation is hardly fixed, but is necessarily a changing reality
Yesterday the Congressional Budget Office (CBO) put out "Competition and the Cost of Medicare’s Prescription Drug Program.” The prescription drug program, or Part D, has been a notable success — indeed, the best-working entitlement program. Nevertheless, opponents of the private-sector driven design, such as those who favored the administration’s efforts to gut competition and choice earlier this year are likely to seize on the report as evidence that competition is not important or working in Part D.
It often appears that Congress is doing nothing. Yet, at the same time, some days there is a lot going on. Here’s a sampler of legislative activity as Congress heads toward its August recess.
Recently, the Environmental Protection Agency (EPA) temporarily withdrew its rule on “wage garnishment” due to “adverse comments.” The EPA took an almost unprecedented action on the regulation by releasing it as a final rule, instead of going through the normal rulemaking process.
The Trustees of the Social Security and Medicare programs released their annual reports yesterday. Read the coverage and claims contained therein carefully, with an eye for two key moments of spin: (1) the fiscal news is good and the programs are fine, and (2) Obamacare has improved the outlook for Medicare. Instead, remember this: (3) both programs are fiscal toast and need immediate reforms to continue to provide future seniors with an appropriate safety net.